The Share Market

Need a ride, or somewhere to stay? How about a bar fridge, a frock or a designer chair? The burgeoning ‘sharing economy’ means you can track down your heart’s desire more quickly and at less cost than ever before. The new disruptive paradigm is a boon to consumers, but not to traditional businesses hamstrung by the same old regulatory regimes…

Author(s): Mark-Irving

Mi casa es su casa. ‘My house is your house’ is the literal meaning, though the Spanish phrase is often more liberally translated as ‘What’s mine is yours’.

It’s an idiom often associated with bygone days when life was slower and people enjoyed more interaction with their neighbours; a period when we were less avaricious and possessive about, well, possessions. But is it possible that Gen Y – derided by Baby Boomers as addicted to selfies and narcissism – might be changing society’s view of how we regard possessions? Is the ‘sharing economy’ replacing the capitalist economy? Are we going back to the future?

Rachel Botsman believes so. The British thought leader and cultural commentator is credited with popularising the term ‘collaborative consumption’ to describe consumption based on shared access to services. Rather than exclusive ownership and use of an asset, goods are swapped, bartered and shared. Collaborative consumption might still be in its infancy, but it’s spreading like wildfire through cyberspace, and making a big impact in our larger cities.

Check out swaptrees.com for links to a host of websites that encourage the swapping of books, CDs, DVDs, video games – you name it, you can swap it. Go to tushare.com and discover how to get free stuff from people who no longer need it. Visit friendswiththings.com.au and you’ll find a cyber pinboard listing things to swap, share or get for free.

In Sydney and Melbourne, you can hire neighbours’ cars on sites like carnextdoor.com.au, rent out your own vehicle through drivemycarrentals.com.au, or swap clothes through clothingexchange.com.au.

Illustrations Jay Riggio

Some believe the demise of exclusive ownership began with the groundbreaking peer-to-peer music sharing service Napster. Why buy a CD when you could download music for free?

The sharing seeds were sown and nourished by social media platforms such as Facebook, Twitter and Instagram. As we became comfortable sharing our innermost thoughts and crazy deeds in cyberspace, sharing a book or car ride seemed like small beer. And so renting or offering spare rooms to strangers became commonplace through couchsurfing.com, and big business through Airbnb, stayz.com.au and the like.

Botsman believes people are “wired to share”, and insists collaborative consumption is a powerful cultural and economic force whose time has come. Why buy a car, which spends most of its time sitting in the driveway or at the station car park? Why buy a power drill, she says, when it will be used on average for only 13 minutes in its entire life – and all you really need is the hole it creates, not the drill, right?

One answer, of course, is we place a premium on instant access, but Botsman claims real-time technology replicates that high level of convenience.

“Technology,” she told a Sydney conference, “is enabling trust between strangers. We can mimic the ties that used to happen face-to-face but on a scale and in ways that have never been possible before.

“Social networks and real-time technologies are taking us back. We’re bartering, trading, swapping and sharing, but they’re being reinvented into dynamic and appealing forms… in ways that are more hip than hippy.”

Botsman’s vision of a caring, sharing society makes for an appealing picture, but is it sustainable? If disruptive technology undermines the traditional economy so that we – the consumers – are the winners, who are the losers? The traditionalists, or some consumers, too? After all, who protects us from fraud, dodgy deals and faulty products in this merry-go-round of swapping? Meanwhile, debate is growing over the foundations underpinning ‘the sharing economy’, with some arguing its cooperative nature is just a facade. Fred Wilson, a New York City-based venture capitalist and blogger, believes 2014 was the year the sharing economy “was outed as the ‘rental economy’”.

“Nobody is sharing anything,” he said in a blog posted last New Year’s Eve. “People are making money, plain and simple. Technology has made renting things (even in real time) as simple as it made buying things a decade ago.”

To see what he means, visit rentoid.com, a forum connecting owners and renters “of almost anything”, from computers and baby equipment, to trades hire. It’s certainly a sharing economy, but one where there’s a buck to be made.

Ed Kushins is the founder and president of HomeExchange.com, one of the world’s most successful home-swapping sites, with more than one million exchanges over the past 22 years. He agrees with Wilson that the sharing economy has expanded to encompass ventures that are more commercial than philanthropic.

“It’s a tremendous shift in asset utilisation but it’s not necessarily sharing or collaborative,” he says. “A lot of it has to do with renting or buying. For me, sharing is sharing, and it’s not paying.”

Illustrations Jay Riggio

His idea for home-swapping originated on a family vacation he took in Washington DC in 1992. It makes Kushins a true pioneer of the sharing economy (“We were doing it before there was a name to it – before Google”) and he insists his business is a true example of collaborative sharing.

“How much more collaborative can you get than when your entire model is based on you staying in my home while I stay in yours with no money changing hands?” he asks.

He readily accepts, however, that this attitude is born out of self-interest, not philanthropy. “People, don’t wake up in the morning and think, ‘I wonder what I can share today?’ out of altruism,” he says. “They’re thinking, ‘What’s in it for me? What can I get out of using somebody else’s stuff?’ And it usually turns out to be accessibility, saving time and saving money. I get to use someone’s house in, say, Paris, and my empty home becomes a ticket that allows me to use that home in Paris. That’s what’s in it for me.”

Margy Osmond, however, is skeptical about the sharing economy. As chief executive officer of the Tourism & Transport Forum – Australia’s peak industry group for the tourism, transport and aviation businesses – she represents some of the industries perhaps most threatened by the new way of doing things.

“The ‘sharing economy’ is a misnomer – it’s a fee-for-service economy, which businesses have been doing for years, whether they are an accommodation provider, a rental car company or a taxi operator,” she says.

She does, however, acknowledge that the sharing economy is here to stay. What she wants is a level playing field.

“While accommodation providers like hotels, motels and serviced apartments must meet certain building and safety standards, including fire regulations, there’s no such requirement for people renting rooms online,” she points out. “Those accommodation providers also pay tax, but there are serious question marks about whether people renting out rooms in their homes are paying tax on that income.”

Bradley Woods, chief executive officer at the Australian Hotels Association (WA), agrees. “The key for us is how disruptive technologies can be used to legitimately sell and provide products and services that are not licensed or regulated when they are competing with those that are,” he says. “There’s always going to be space for cheaper-style accommodation, particularly where people are willing to take a risk around safety and services.

“But we would argue everybody competing in the same market should meet the same regulatory standard and tax standards. Otherwise, we end up with anarchy, because the regulated businesses start to say, ‘If all these other operators over here are getting away with it, we’ll look at restructuring the business to see how we could also get into that space.’

“You could just see very clever accountants and lawyers looking at ways in which to structure ownership and other things to potentially create further turmoil for governments.”

As a side issue, he adds, the rising popularity of short-term accommodation might result in higher rents for long-term renters because supply will be reduced.

After accommodation, transport is probably the biggest area of interest for sharers, not least because it has the potential to both generate income and reduce costs. Matching spare seats with travellers is helping fill the gap created by the demise of that most authentic example of collaborative consumption – hitchhiking.

The extent of the demand is illustrated by the figures. For instance, Paris-based BlaBlaCar, which arranges ride-sharing between cities, has eight million members across Europe.

From New Jersey, USA, Max Fox remembers how his father, like all the other men in their street, would drive out of their homes at the same time every day and park their cars at the railway station before boarding the train to work.

In 1999, Fox and his wife, Isabelle Boullard, both mainframe software developers, set up a ride-sharing service to eliminate such wasted resources. Called carpoolworld.com, it’s expanded across the world, including to Australia, where about 50 new members join each month.

Corporations whose workforces need cheap transport to get to work also have signed up, including the University of Wollongong, which offers free parking for cars arriving with three or more people.

“carpoolworld.com assists people to find others who might be able to travel together,” says Tom Hunt in Transport Projects at the University. “Mostly it’s been students who’ve been doing it, but we’d like to get more staff on the website, and this year we’re going to have a big push to achieve that, too.”

More controversial has been the car-ride service Uber, which has a presence in 250 cities in almost 50 countries, and is said to generate a turnover of nearly $1 billion a month. Its success may seem a textbook case of disruptive technology empowering ordinary people to take on vested interests (in this case, the highly regulated taxi industry), as well as reflecting disillusionment with the traditional system of doing things, but Uber’s journey has not been smooth. There’s been a storm of PR disasters for it to weather: a country-wide ban was imposed in India after accusations of rape against an Uber driver; the Thailand government has banned the service, saying it is illegal to provide private cars for paid rides rather than licensed taxis; and, closer to home, the WA Department of Transport is investigating individuals involved with Uber to determine if vehicles have been operating outside the Taxi Act.

Margy Osmond has her own concerns about UberX, Uber’s low-cost hire model. “We don’t want people – either drivers or passengers – to find out the hard way that they’re not covered in the event of an accident,” she says, “and at the moment, we simply don’t know.

“In a registered taxi, you’re covered by insurance, and taxi drivers have been screened and trained to provide the service. The taxi industry also provides monitored networks with in-built safety and security features.

Her concerns highlight a conundrum facing participants in the sharing economy: who’s looking after their interests, and where do they turn if something goes wrong?

Illustrations Jay Riggio

It’s a not inconsequential point, considering one of the other big trends in society is to legislate to ensure everything is as safe as humanly possible. And if something goes wrong, we tend to follow another trend – we sue.

The safety card is the one pulled out by the Hire and Rental Industry Association of Australia when asked about online renting forums. “When it comes to hiring equipment, safety has to be paramount,” says the Association’s operations director, James Oxenham. “Where is the responsibility for the safe instruction and education of the end user? Who is ensuring Australian Standards are met and workplace health and safety regulations are being observed? In the event of an accident, who is responsible if the accident is caused by non-compliant faulty machinery, or operator error?”

Bradley Woods makes the point that technology moves faster than politicians and regulators. “The reality is it’s going to take some time for governments internationally and domestically to catch up with technology,” he says. “They’re about three steps behind.”

Technology versus governments, collaborative consumption versus hyper-consumption, cooperation versus competition, regulation versus free spirits – how this will all play out is anybody’s guess. Maybe there are clues in the fate of that regulation-busting trailblazer which so challenged and disrupted vested interests in the music industry – Napster.

As a free file-sharing service, Napster no longer exists. Closed down by the courts, it went bankrupt and was eventually absorbed into an outfit called Rhapsody. Type napster.com into your computer today and you’ll be redirected to rhapsody.com where you can “download any song, album, or playlist… for $9.99 a month”.

Whether that can be counted as a win for the establishment, or merely a pyrrhic victory at the start of a very long war, remains to be seen.

Wear and back again…

Tired of buying a dress for a big occasion, wearing it once and consigning it to the back of your wardrobe? A new Perth company has an alternative.

Perth A-lister, fashionista and businesswoman Emma Milner knows that change is coming to the retail fashion scene… and she wants to be part of it.

When it comes to wanting a stunning dress or gown for that special event, hire is replacing buyer. So Milner, co-founder of the fitness concept store 24/7 Lifestyle Studio in Sorrento, has decided: if you can’t beat ’em, join ’em.

She’s seen the growth overseas of top-end wardrobe-sharing businesses like Rent the Runway, and is joining the retail revolution with her business, Only Worn Once Australia: “I think it’s the way to go. It’s making fashion accessible for those who can’t necessarily afford it.” Hers, she says, will be Perth’s first high-end outfit hire. “Generally, in Perth, the hiring of fashion is at mid-level-tier garments. I’m hoping to come in at a higher level, where girls come to see me for a very special occasion.”

Milner says her business will be stocked with her own personal garments only she’s worn – ensuring interest will be sky high as she tempts socialites to rent, not buy. “A lot of my gowns are high-end, international labels, straight off the runway. But there are certain pieces that I don’t think I’ll ever share.”

Milner was still finessing her business model when she spoke with Scoop, and was uncertain whether she would also stock a large range of luxury accessories, plus shoes and dresses in various sizes. But she had done enough research to know that hirers return their garments to dry cleaners for laundering and any repairs, before they are delivered back to the hire studio.

“In some businesses, the ‘it’ dress of the season can be booked out for three months in advance,” she says. “It’s big business and it’s only going to get bigger. I don’t think retail will ever be the same again. I think it’s going to be the way of the world over the next couple of years.

“I know some designers are getting upset about wardrobe sharing because it means they’re selling to businesses that are sharing fashion. But even though it’s going to upset some, at the end of the day, business is a sport – you’ve just got to know how to play the game!

“Unfortunately for retailers, it is happening and there’s nothing they can do about it. People need to get smarter, and the way it’s going to go is a lot of people are going to have a sharing section to their business.

”Likewise, Milner accepts that today’s savvy fashion-hunters – their smartphones arming them with instant access to apps, Google and eBay – mean retailers have to brace for the new reality: shoppers want the best deal, and they’re prepared to shop around online to get it.

She has first-hand experience of customers taking selfies in the changing room then sourcing the garments online. “They come in, look at the pants, and you can see them Googling them in the store. I don’t worry, because if they find a (better) price, I’ll match it. You have to roll with the punches.”

Re: cycling in Freo

Fremantle has taken to the sharing economy with gusto.

Often at the forefront of changes and activism, Fremantle boasts several examples of collaborative consumption, with more afoot. The city council has initiated a small-scale free bike-hire service, comprising 10 bikes at two locations. However, Mayor Brad Pettit wants more large-scale bike sharing, along the lines of those in Brisbane and Melbourne.

The council also has endorsed a car-share policy trial, aiming to promote car-sharing options and facilitate a fleet of at least 50 share vehicles by 2020. And a clause has been inserted in its planning scheme to allow car bays to be waived in inner-city unit developments if a formal car-sharing scheme is operating among residents. Pettit says this will help bring down the cost of new units, and make living in Fremantle centre more affordable.

The council has also been in discussions with GoGet, a car-sharing service whereby members can rent by the hour a variety of different types of vehicle owned by the company. GoGet has secured dedicated parking bays in residential streets of Sydney, Melbourne, Brisbane and Adelaide, meaning renters can often walk to collect a vehicle. Bruce Jeffreys and co-founder Nic Lowe are both West Australians who moved to Sydney a few years ago, and launched GoGet in 2003 with three cars and 10 members. They claim it was Australia’s first professional car-sharing service: today, it has more than 50,000 members and 1800 vehicles.

“Most people commuting into work don’t need their car much during the week,” says Jeffreys. “It’s at the weekends when they need them, while most businesses and governments generally don’t need (cars) then.”

Jeffreys is reluctant to predict when GoGet might set up in WA, citing major differences in city densities and infrastructure compared with the eastern States, but should it eventually cross the Nullarbor, he suggests it will work closely with government and public transport authorities.

Longtime Fremantle resident Peter Newman, director of the Curtin University Sustainability Policy (CUSP), reckons car sharing is one way to keep cities sustainable. “It used to be that you measured the wealth of the economy by how many cars were owned and how much they were used,” he says. “But they’re completely separated out now, and car use is going down everywhere – even in the Chinese cities.”

Newman says the younger generation in particular is content to share cars. His son, Sam, has never owned one, preferring to share with mates. “It’s a completely sharing economy group of people, but there’s no organised system to it.” He himself shares cars at CUSP. “There are three cars for the eight or so people who work there and live in Fremantle.”

One of CUSP’s PhD students, Paul Rowney, is working on Multi Modal Mobility to examine how various transport modes can best be integrated, including ride sharing. “Youngsters have been acclimatised to not needing to own a vehicle, and are accustomed to ‘use on demand’ without proprietary ownership,” he says. “It is highly likely that sharing rides in one form or another will become an integrated part of everyday life.”